RETAIL MARKETING OF MEATS 75 
are sure to be harmful in either event. Expense of operation usually 
accords fairly well with the service rendered, and under conditions 
of reasonable competition the price spread or gross margin adjusts 
itself fairly well to the service rendered, with a reasonable profit to 
the dealer. With lack of reasonable competition, or with excess of 
competition, the gross margin is likely to be excessive in the one 
case or too small in the other as compared with the service rendered 
and with the expense involved. 
The difference in total operating expenses between the groups of 
low net profit and those of high net profit is generally distributed 
among the various items of expense. The item of wages carries a 
large part of the difference, but less proportionately than its share 
of total expense. Advertising was reported slightly higher by the 
concerns with low net profit than by those of high net profit. In 
examining individual instances it is found that among concerns 
making highest expenditures for advertising there is a wide varia- 
tion between generous profits and net losses and that a similar varia- 
tion exists among those who advertise little or not at all. Under 
suitable conditions judicious advertising doubtless proves advan- 
tageous to the dealer; but these group figures do not offer any en- 
couragement for its use as a general practice in the meat trade. It 
would be of much interest to know whether there is any definite rela- 
tionship between rent and advertising, to what extent by the use of 
advertising trade may be drawn to a less desirable location where 
there may be a saving in the amount of rent. To some extent this 
would, of course, occur; but no general conclusions can be drawn, 
since it is found that among those individual dealers whose expense 
of advertising was highest some had rental expenses above and some 
below the average of their group. 
Losses from bad debts were appreciably higher in the group of 
lowest profits, but the aggregate amount was so small as to be of no 
particular significance in the general result. Wrappings and the 
group — refrigeration, heat, light, and power — which might be ex- 
pected to be fairly constant regardless of the rate of profit, show the 
least variation of any of the items. Interest also shows but little 
variation with reference to the degree of profit, since the amount of 
merchandise carried, an important element in determining profit or 
loss in most lines of merchandising, is unimportant in the meat 
trade. Delivery expense, including the delivery portion of wages, 
was much higher in the low profits groups than in the higher, which, 
perhaps, reflects an actual condition in the trade that heavy delivery 
expense, when the service is not kept within bounds, is likely to have 
an unfavorable effect upon net profits. 
The slightly higher expense of the groups with low net profits 
is so generally distributed among the various items that it seems to 
be due primarily to somewhat less efficient operation generally, re- 
sulting in lower volume of sales in comparison with size of plant or 
in conducting a plant more expensive than the trade warrants, 
rather than to high expense in particular items. Because of this 
lower volume of sales, the percentage relationship of each of the 
expense items to net sales is higher in substantially all instances in 
the lower than in the higher net-profits groups ; and the relationship 
of these expense items to each other by group averages is quite uni- 
